Coronavirus Aid, Relief and Economic Security (CARES) Act

The CARES Act intends to bring relief to those impacted by the coronavirus pandemic. It may also have significant implications for your retirement planning. While the Act aims to help you in the short-term, it’s important to understand the long-term impacts on your overall financial picture. Please talk with your financial professional about your specific situation.

CARES Act temporary provisions


Financial relief provisions include:
  • Emergency stimulus checks
  • Student loan modifications
  • Relief from evictions due to nonpayment of rent
  • Enhanced unemployment benefits
  • Delayed tax payments
  • Emergency paid leave
  • Emergency sick leave

Think about these forms of relief before taking money from your annuity retirement account and potentially negatively impacting your retirement readiness. Decisions like this can be difficult; we're here to explain the options so you can determine what's best for you and your family.

QuestionMark-outline
If you have questions about the specific provisions of the Act, you can go to https://www.congress.gov/bill/116th-congress/house-bill/748.

The CARES Act and your retirement

We recognize that accessing your annuity retirement account could be an option for you at this time.

Call 1-800-848-6331 if you need to access funds or have questions. Our Solutions Center team members will continue to ensure extraordinary care and are ready to assist you with your COVID-19-related distribution request.

PiggyBank-outline-teal

Required Minimum Distributions (RMD)

 

The Act waives RMD payments due in calendar year 2020 for retirement plans and IRAs.

Note: Contact us to discuss your RMD status.

PiggyBank-outline-teal

Retirement savings

 

The Act allows for tax-favored withdrawals up to $100,000 and:

  • Waiver of the 10% early withdrawal tax for members younger than 59 1/2 and meets coronavirus distribution criteria
  • Three years to pay standard income taxes
  • Three years to repay all, or a portion, of the distribution. Repayments are not subject to contribution limits.

A coronavirus-related distribution is a distribution made to an individual:

  • Who is diagnosed with COVID-19;
  • Whose spouse or dependent is diagnosed with COVID-19; or,
  • Who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care due to COVID-19, closing or reducing hours of a business owned or operated by the individual due to COVID-19, or other factors as determined by the Treasury Secretary.

For IRAs, this is between the taxpayer and the IRS when filing. For plans, The CARES Act provisions are voluntary, meaning the employer or plan sponsor must amend the plan to adopt the CARES Act distribution provision and the repayment provision.

PiggyBank-outline-teal

Loans

 

For new and existing loans, loan payments due in 2020 can be deferred for one year.

The CARES Act loan provision allows for coronavirus related loans in the amount of lesser than $100,000 or 100% of the participant’s vested account balance.

CARES Act provisions are voluntary, the employer or plan sponsor must amend the plan to adopt the loan provision.

The plan must also determine participant meets coronavirus related criteria in order to allow the coronavirus loan.

Things to remember about retirement planning

Any loans or withdrawals impact your account balance. Never lose sight of the long-term impact they can have. If you take yourself out now, you may not benefit from a rebound.

It’s important to weigh all available options to address your immediate financial needs while still being thoughtful about your future well-being.

We exist to protect people, business and futures with extraordinary care

We know these are difficult times, and we’re here to help if you need access to funds. We will work with you to help you take advantage of the CARES Act provisions. Call us at 1-800-848-6331.

Nationwide doesn’t provide tax or legal advice, and federal laws related to these types of contracts are complex and can change; be sure to consult with your tax advisor or attorney if you have questions.

Withdrawals may be subject to ordinary income taxes and may reduce your death benefit and contract value.